Shandong Wenling Precision Forging's Growth Strategy
Through savvy management and an aggressive product-development strategy, China’s Shandong Wenling Precision Forging has grown from a private company making simple forgings into a publicly traded enterprise making sophisticated precision automotive forgings.
Shandong Wenling Precision Forging Technology Co. (the former Laiwu Wenling Forging Co., Ltd.), Shandong, China, is a wholly owned subsidiary of Shandong Huifeng Driveline Co., Ltd. The company was founded in 2003 with a registered capital evaluation of about $10 million and operates in a plant that occupies 1.6 million square feet (145,300 square meters). The operation employs 460 people.
Ren Qihua, the founder of Wenling, has led the company to rapid growth with his persistence and innovative spirit. In its early years, the company’s main products were simple forgings for machinery. Early on, its customers were small manufacturers, but little by little Wenling’s list of clients grew.
In 2005, the company achieved the ISO 9001:2000 quality management system certification and passed the ISO/TS16949:2002 quality management system certification in 2007.
Then, in 2008, came the great recession in global metal markets. Believing that economic downturns always come with opportunities, Qihua started investing in upgrading his operation. While Wenling’s competitors were reducing their production or going bankrupt, Wenling invested in upgrading its process technologies and started to produce spiral bevel gear forgings and transmission gear forgings.
After weathering the recessionary storm, the company continued its path to growth. Demand by customers for precision forgings made Qihua aware that product upgrading was an imperative strategy for his company. Thus, at the end of 2009, Qihua decided to invest more than $20 million to build a new standardized shop that occupies 660,700 square feet (60,000 square meters). The improvements in its plant and equipment and upgrading its product offerings made Wenling a vigorous contender of market share in a weak market.
In the process of expanding, more than 200 machine tools such as CNC vertical lathes, machining centers and other equipment purchased from domestic and overseas sources were put into place. The new plant went into production in 2010 and now has an annual capacity of 2.4 million sets of spiral bevel gear forgings. With this considerable upgrading in place, the forge gradually established close business relationships with FAW, Dongfeng Auto and Zhuzhou Gear.
At the end of 2013, Wenling started to develop upscale markets domestically and abroad. Eventually, the company became an important manufacturer of spiral bevel gears for commercial vehicles and has cooperated with Dongfeng Dana Axle Co. to develop lightweight spiral bevel gears. With other companies, such as American IPC, FAW Group, AVIC Hunan Nanfang Aviation Co. and Zhuzhou Jiuzhou Four Dimensional Co., Wenling has developed wheels for subways, industry and mining, tooth-like spiral bevel gears, and heavy-duty transmission gears for ships and trains. Wenling currently offers more than 600 upscale and precision forging products and has established numerous long-term strategic partnerships with many domestic and international companies.
Wenling started as a privately held company, but in 2015 it became a publicly traded one. In June 2016, a new plant was built in Gangcheng Industrial Park and equipped with several 2,500-ton and 1,600-ton electric screw presses.
As of July 2016, Wenling runs 20 advanced forging lines, 16 large-scale automatic isothermal normalizing lines and various associated devices. As previously mentioned, it has an annual production capacity of finishing 2,400,000 sets of spiral bevel gears and exporting 50,000 wheels.
Recently, the company installed 8,000-ton and 4,000-ton friction presses; five 2,500-ton, five 1,500-ton and five 1,000-ton friction presses; a 5-ton and 10-ton electro-hydraulic hammer; 12 vertical ring-rolling machines; and two natural gas isothermal normalizing lines, all of which help improve product quality and precision.
Wenling can provide forgings up to 15,000 kg (33,070 pounds), and its annual capacity is 100,000 tons of forgings, heat treatment of 100,000 tons (isothermal normalizing, quenching and tempering, normalizing), and fine machining of 1,500,000 sets of spiral bevel gear forgings, its main product. The company’s spiral bevel gears have won the Shengong Masterpiece award, issued by the Confederation of the Chinese Metalforming Industry.
In the past few years, Wenling has been working to introduce advanced technologies into their industry. With support from a local technology center, the company has established strategic partnerships with the University of Science and Technology of Beijing, Huazhong University of Science and Technology and Shandong University. Additionally, the company owns more than 60 patents on its work and innovations.
A number of its research results have won awards for scientific and technological advancement. For example, the combined forging of drive gears and differential carriers, which was researched and developed together with Dongfeng Dana, became a technological centerpiece in the automotive industry and reduced gear weight. Also, the company worked with FAW to develop a high-precision tooth-like forging technology that helps improve material utilization and production efficiency, enhance gear strength and expand service life.
During its more than 10 years of development, Wenling has realized its transition from a traditional to a high-tech enterprise and has won a series of honors such as China’s Top Ten Forging Enterprises, National Quality Assured Customer Satisfied Enterprise, Shandong Star Enterprise and other awards.
Financial and Human Resources
Wenling’s physical output and sales revenue have a history of solid growth. In 2012, the company produced 52,800 tons of product, resulting in sales $61.2 million; 68,500 tons of product valued at $69.9 million were shipped in 2013; and 70,300 tons of product valued at $480.5 million were shipped in 2014. Between 2012 and 2014 output tonnage grew a total of 33%, while sales income increased 18.1% for the same period.
Regarding the company’s 460 employees, 62% are operators, 16% are R&D personnel, 14% are managerial staff and the remaining 8% serve other functions.
Wenling started as a private company but has been a listed company since 2015. It owns a bigger competitive advantage than most other state-owned companies and most unlisted private companies. The company is a member of the Confederation of Chinese Metalforming Industries, with a municipal-level enterprise technology center equipped with advanced quality testing equipment and physical and chemical laboratories.
The company adheres to the spirit of “Scientific Management, Customer First, Credit First” and the idea of “Cooperation with Sincerity, Mutual Benefit and Win-win.” It will continue to provide high-quality products for customers and contribute to the development of China’s national automobile industry.